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Harvey Spector

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'Severely unaffordable' Vancouver places third in survey

Vancouver is the third most unaffordable among a survey of major world cities, according to an international study.

And with affordability deteriorating faster than any other major city, Vancouver also has the worst housing bubble risk, the study says.

Meanwhile, a new poll shows that millennials across B.C. say Vancouver is the first place they would like to move to, “if money were no object.”

The 2017 Demographia International Housing Affordability Survey, which compares median house prices to median household incomes to generate an affordability ratio, surveys 406 metro housing markets in nine countries. A “median multiple” value of 3.0 — meaning a home costs about three times annual household income — is deemed affordable in Demographia’s study.

Vancouver is rated “severely unaffordable” with a median multiple value of 11.8. At a value of 18.1, Hong Kong is the survey’s most unaffordable city. And in Australia, Sydney is slightly more expensive than Vancouver, with a 12.2 median multiple value.

“There are serious consequences for residents,” the survey says. “The higher house prices reduce discretionary incomes, which reduces potential standards of living and raises relative poverty rates.”

Toronto has the second least affordable housing among major cities in Canada, the survey says, with a median multiple value of 7.7.

Demographia has been publishing its housing cost study since 2004. Vancouver was rated severely unaffordable that year with a median multiple of 5.4. And while Vancouver is still more affordable than Hong Kong, in comparison, the study suggests the trend in Vancouver is getting worse for middle-income earners. This year’s survey said Vancouver “has experienced the greatest housing affordability deterioration among major markets.”

According to Demographia, data shows Vancouver is now experiencing modest out-migration, with more people moving away than moving into the city.

The survey notes that the UBS Global Real Estate Bubble index rates Vancouver as having the world’s worst housing bubble risk.

However, “Vancouver’s rapid escalation in house prices has stalled since August, after the imposition by the British Columbia government of a foreign buyers tax.”

Demographia concludes generally that “urban containment” policies, which put strict constraints on land and development, are a factor causing affordability problems in the cities surveyed.

“We should not accept extreme price levels in our housing markets,” the report says. “High house prices are not a sign of city’s success, but a sign of failure to deliver the housing that its citizens need.”

Meanwhile, a new poll says that a majority of millennials in B.C. hope to move to the Vancouver area if they can afford it. But failing that, the poll says, they would rather leave the province.

The study conducted by Insights West for Resonance Consultancy, a global advisor on real estate and economic development, says that among all B.C. millennials asked “If money were no object, where would you move to?” 68 per cent made Greater Vancouver their top choice.

The study said that of 19 per cent of respondents that planned to migrate from their current location in B.C., 45 per cent said they would end up in Greater Vancouver, and 38 per cent said “outside of B.C.”

“There is a tremendous challenge ahead for policy-makers and politicians to make Greater Vancouver affordable and welcoming for millennials,” Resonance’s president Chris Fair said.

Eveline Xia, a Vancouver millennial who started a popular social media campaign against skyrocketing home prices, said given current trends she expects more young workers will leave the city, to the detriment of communities and the economy.

“It’s hard to know exactly what is happening with millennials in Vancouver, but my experience in my circle is about half have already left,” Xia said. “I think people are leaving en masse for Vancouver Island and for Seattle and also for Portland.”

Another recent poll conducted by Insights West found that 40 per cent of Vancouver homeowners in Generation X (35 to 54) were planning to sell their home and move to a more affordable city. Of millennials 35 per cent planned to move to a more affordable city, compared to 28 per cent of boomers.

http://vancouversun.com/news/local-news/severely-unaffordable-vancouver-places-third-in-survey

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New census counts 25,502 unoccupied homes in Vancouver, for 15 per cent jump over 2011

The latest census numbers for 2016 show there were 25,502 unoccupied or empty housing units in the City of Vancouver.

That’s 15 per cent higher than recorded during the last census in 2011.

Urban planner Andy Yan of Simon Fraser University’s City Program compared census data for Vancouver over several decades to see how the percentage of “unoccupied” units or ones “occupied solely by foreign residents and/or temporary present residents on Census Day” has doubled during that time. In 1986, it was four percent. In 2016, it rose to 8.2 per cent.

“Exact definitions and measures have changed slightly over 30 years and patterns should be interpreted as directional,” Yan writes in a report, also released Wednesday. 

For Vancouver, the direction is up. The city far outstrips other municipalities with 25,502 units that are unoccupied or owned by temporary or foreign residents. Yan said most of these were concentrated in three areas: Coal Harbour, Marine Gateway and Joyce-Collingwood. Surrey came in second at 11,195, Burnaby at 5,829 and Richmond at 4,021.

The number of unoccupied units or ones occupied by temporary or foreign residents increased 25 per cent in Richmond between the 2011 and 2016 census and by 28 per cent in Burnaby.

However, some of the widest percentage jumps occurred between the 2001 and 2006 census.

The census numbers of unoccupied units are more than double an estimate released by city hall last year because a completely different set of criteria and data were used.

Assessing the extent of empty or underused homes can differ depending on “your measurement tools,” said Yan.

While the census might count a greater number of folks who are, say, on extended vacation during the census period, the city’s estimate was criticized for likely missing the number of units used for only short, seasonal periods, perhaps one or two months in the summer, but then are left vacant for the rest of the year.

There are arguments to be made for and against both, but Yan said the census figures show growing numbers over an extended period.

The census counts the number of “total private dwellings” and “private dwellings occupied by usual residents.” Its definition of unoccupied units means those that were vacant on Census Day, including properties for rent or sale, ones that have been purchased, but whose owners have not yet moved in, as well as furnished units that are second residences.

It also includes units that are used on a temporary basis and/or by foreign residents. In the 2011 census, just over 4,000 of the 22,000 units “not occupied by usual residents” were used by temporary and foreign residents, according to Ryan Berlin, senior economist at the Rennie Group, who made a custom request following the general census release to get the breakdown, which, for 2016, he hopes will be available from StatsCan in a few months.

The City of Vancouver in March 2016 commissioned a private firm to analyze the extent of empty homes by using B.C. Hydro data to see how much electricity was used over a certain number of months. Looking at 225,000 homes over a decade, it found that by 2014, under five per cent or 10,800 units could be considered unoccupied for a year or more. A whopping number 90 per cent of these housing units were deemed to be “non-occupied” and for all condos, the report found 12.5 per cent were vacant.

From this, in November 2016 city council voted to approve a tax on empty homes, the first in Canada. Based on self-reporting owners, the tax is a one-per-cent charge on homes that are not principal residences or are not rented out for at least six months of the year. The goal is to improve Vancouver’s tight rental vacancy rate of 0.6 per cent by encouraging owners of thousands of empty units to offer them up for renting.

The release of Wednesday’s census data from Statistics Canada reinforces the need to address the issue of empty and underutilized homes in Vancouver, and why the city’s new tax is an important step for freeing up rental housing, said city spokesperson Tobin Postma in a statement. 

Postma said regardless of which data set is used, the census or the city’s, both show “there is a significant number of homes that sit empty in Vancouver at a time when we face an affordability crisis.”

http://vancouversun.com/news/local-news/census-counts-25502-unoccupied-homes-in-vancouver-more-than-double-the-estimate-by-city-hall

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https://betterdwelling.com/city/vancouver/vancouver-real-estate-inventory-skyrockets-over-215-in-january/

 

Inventory is rising too now?

Quote

Inventory Is Rapidly Building

The big story is inventory, and how quickly it’s building. 4,140 new listings hit the MLS in January, representing a mind boggling 215.5% increase from the month prior. This sent the total number of homes listed up 9.1% from the same time last year, leaving 7,238 listings available for sale. This represented a 14.1% increase from the month prior.

An increased in new listings alone isn’t an issue, however when sales are declining and prices are dropping as well, that’s when we have a problem. Chinese demand for the city’s real estate may be cooling due to regulatory constraints in China. The theory that homes will begin hitting the market with aggressive price cuts is starting to look like it is playing out. If this is the case, the city could see prices drop rapidly since domestic buyers in Vancouver don’t have the income required to support prices at these levels.

 

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4 hours ago, taxi said:

Inventory is always at its lowest in December. If you look at the chart over the last 10 years you will notice inventory levels always drop massively in December and then rise again in January. Sales are always at their lowest in December as well.

 

A better indication will be what happens this month. So far sales are brisk on the attached side but no so much on the detached side. We'll see how it plays out this month. 

 

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Any advice on a real estate rental investment would be appreciated:

 

these are my scenarios:

 

low end: 

 

purchase house/duplex requiring minimal aesthetic upgrade - essentially turn key tenant ready.  Mortgage covered with a small monthly cash flow in lesser area.

 

mid range:

 

house or duplex in better area with a higher %age annual value increase.  Minimal aesthetic improvement required.  Potential for legal suite Reno.  Mortgage covered only but banking on better annual value increase.

 

higher end

 

brand new house with built in legal suite in nice growing location.  Nearly all my down payment used,  mortgage covered with minimal monthly cash flow.  Value increases in this area are already significant in the last couple years.

 

the catch:

 

my down payment is based on a borrow on equity from

my current house.

 

location: Vancouver island.

 

i am experienced and capable of any type of Reno work outside of elec, gas, plumbing.

 

i feel the higher end is a bit of a gamble in assumption the market will continue to increase and nearly all of my available funds will be wrapped up. But the other edge of the sword is I'm concerned the market will increase in the better area if I wait and therefore price me out.

 

there is obviously so much more involved than this summary, but anyone current landlords out there????  Advice?

Edited by riffraff
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3 hours ago, riffraff said:

Any advice on a real estate rental investment would be appreciated:

 

these are my scenarios:

 

low end: 

 

purchase house/duplex requiring minimal aesthetic upgrade - essentially turn key tenant ready.  Mortgage covered with a small monthly cash flow in lesser area.

 

mid range:

 

house or duplex in better area with a higher %age annual value increase.  Minimal aesthetic improvement required.  Potential for legal suite Reno.  Mortgage covered only but banking on better annual value increase.

 

higher end

 

brand new house with built in legal suite in nice growing location.  Nearly all my down payment used,  mortgage covered with minimal monthly cash flow.  Value increases in this area are already significant in the last couple years.

 

the catch:

 

my down payment is based on a borrow on equity from

my current house.

 

location: Vancouver island.

 

i am experienced and capable of any type of Reno work outside of elec, gas, plumbing.

 

i feel the higher end is a bit of a gamble in assumption the market will continue to increase and nearly all of my available funds will be wrapped up. But the other edge of the sword is I'm concerned the market will increase in the better area if I wait and therefore price me out.

 

there is obviously so much more involved than this summary, but anyone current landlords out there????  Advice?

At the end of the day Real Estate is based on 3 key fundamentals:  1. Location and 2. Land. 3. Income 

 

So looking at your 3 scenarios off hand I couldn't give you an opinion unless I knew the exact location of the properties and how much land is involved in each purchase along with the monthly rental incomes. If it was me I would choose the option where the location has the highest appreciation level. Then I'd look at the size of the lot and then the rental income. 

 

So I would call your local realtor to get an idea of the sold prices for each location of each scenario and compare the price appreciation over the last 5 years and also look at the potential of each area moving forward. From the looks of it scenario 2 seems like the best option as I'm not sure I'd buy a brand new house as a rental investment since the house itself decreases in value over time while the land it's sitting on is what increases in value. But again I don't know the size of the lot or location in relation to scenario 2 so it's hard to give an accurate opinion. It's always better if you can do the Reno yourself versus buying something already renovated as you are paying a premium for the completed renovation versus saving money by doing it yourself. A lot of people don't wanna be bothered with doing a Reno on their own so they'll pay the premium to have it done for them but if you can do it yourself then you'll save money in the long run. So again that leads to scenario 2 as your best option. 

 

Hope that helps. If you can give me more info on each scenario then I can maybe better address the best option for you out of the three. As far as borrowing from the equity in your home just make sure it is a separate credit facility so you can keep track of the interest payments and bank fees which you can write off against your income from the new investment property. 

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For immediate release

BC Home Sales Return to Historic Average

Vancouver, BC – February 15, 2017. The British Columbia Real Estate Association (BCREA) reports that a total of 4,487 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in January, down 23 per cent from the same period last year. Total sales dollar volume was $2.79 billion, down 36.5 per cent from January 2016. The average MLS® residential price in the province was $621,093, a 17.5 per cent decrease from the same period last year.

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“Housing demand across the province returned to long-term average levels last month," said Cameron Muir, BCREA Chief Economist. "However, regional variations persist, with Victoria posting above average performance and Vancouver falling below the average."

“A marked decrease in the average MLS® residential price is largely the result of relatively more home sales occurring outside of the Lower Mainland," added Muir.

Home sales from Vancouver fell from 43 per cent of provincial transactions in January 2016 to 35 per cent last month. In addition, fewer detached home sales in Vancouver relative to multi-family units has skewed the average price statistic down in the province's largest urban area. In contrast, the MLS® Residential Benchmark Price in the Real Estate Board of Greater Vancouver area has declined 3.7 per cent over the past six months, but is up 15.6 per cent from January 2016.

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33 minutes ago, Hamhuis Hip Check said:

Im really hoping they extend the foreign buyers tax to the whole province soon, even where i live now prices have gone up about 20 % in the last year and they dont last more than a damn week, stupid government

The market for condos and townhouses is really crazy right now. I am writing full price offers on everything. It's gonna be a crazy year. It looks like the single detached home sales have slowed down significantly which will in turn affect prices on the higher end. But the lower end stuff is flying off the shelves. There is simply not enough inventory right now to keep up with demand. 

 

Whereabouts do you live?

Edited by Harvey Spector
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4 minutes ago, Harvey Spector said:

The market for condos and townhouses is really crazy right now. I am writing full price offers on everything. It's gonna be a crazy year. It looks like the single detached home sales have slowed down significantly which will in turn affect prices on the higher end. But the lower end stuff is flying off the shelves. There is simply not enough inventory right now to keep up with demand. 

 

Whereabouts do you live?

Port alberni, not expensive by any means when compared to vancouver but its still insane, a little 500 square foot house here has already had about 5 people calling about it from vancouver

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15 minutes ago, Hamhuis Hip Check said:

Port alberni, not expensive by any means when compared to vancouver but its still insane, a little 500 square foot house here has already had about 5 people calling about it from vancouver

Crazy stuff.  I know a lot of foreigners are buying in Victoria so that market is super insane. 

 

A good friend of mine used to live in Port Alberni. She married a guy who worked there as the store manager at the Safeway. He got transferred so they moved around and now live in Chilliwack.

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2 minutes ago, Harvey Spector said:

Crazy stuff.  I know a lot of foreigners are buying in Victoria so that market is super insane. 

 

A good friend of mine used to live in Port Alberni. She married a guy who worked there as the store manager at the Safeway. He got transferred so they moved around and now live in Chilliwack.

Its basically everywhere now, i had a feeling this was going to happen when i heard the tax wasnt province wide

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Only Eight Completed New Townhomes for Sale in Entire Metro Region: Report

“We need more houses” – foreign buyer taxes do nothing to improve affordability while land and zoning restrictions remain in place, says Urban Development Institute president

The quarterly report – which is compiled by research group Urban Analytics on behalf of UDI Pacific Region and examines local new home sales, housing supply and population growth – reveals a severe shortage of new home inventory despite record housing starts in 2016.

Anne McMullin, UDI Pacific Region president and CEO, said, “The report confirms that doing nothing, blaming foreign buyers, or introducing new, punitive taxes have not made housing more plentiful or affordable for home-seekers.

“We need more houses for more people, especially along rapid transit corridors. We have plenty of available land, but 85 per cent of it is locked up as restrictive, single-family zoning, meaning no multi-family condos, townhomes, rowhomes, duplexes or even sales of laneway homes are permitted.

“Coupled with years of delays in multi-family building approvals, rising land costs and lack of available land to build on … home-seekers can count on prices to keep rising.”

McMullin added, “We all have to share in the solutions and consider the greater good and community health.”

McMullin said that the best measurement of supply is the amount of new housing is currently available, not just the number of housing starts, as homes are often pre-sold before they’re even built.

The report cited low inventory across all property types, highlighting that as of December 31, 2016, there were only 26 new concrete condos that were completed and unsold in the Metro Vancouver region. The report added, “At the end of Q4 2016, there were a total of 3,416 new multi-family homes available to purchase, which is down 30 per cent from the same quarter last year and still near historic lows. Low released and unsold inventory levels continue to be a primary contributor to the lack of new home affordability across the region.”

Following a slower third quarter of 2016, sales of new condo units in Metro Vancouver recovered by 46 per cent in Q4. The report said, “A combined total of 4,347 new multi-family home sales were recorded in Q4 2016 and while this total is down 15 per cent from a near-record total recorded in Q4 2015, note that they were up 46 per cent from last quarter.”

Population growth remains on a steady growth trajectory and continues to be a key contributor to a strong housing market, according to the report, with Metro Vancouver’s population up 30,700 residents over the past year.

The report also looked at global economic factors affecting local real estate, including the election of Donald Trump as US president and his recent travel ban on seven countries. The report added, “While the ramifications of this policy are uncertain, our stance is that immigration controls such as these only further elevate the status of Canada as a safe and desirable place to immigrate to.”

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Editorial: Pundits Predict Housing to be Treated as “Non-Issue” in BC Election

Leading political commentators believe the Liberals will gamble that they have done enough to cool housing market and focus on other election issues. Are they right?

I thought I’d share with you something that raised a few eyebrows in the real estate industry this week.

A very interesting Urban Development Institute panel event was held at the Hyatt in downtown Vancouver yesterday, entitled “Politics, Pundits and Predictions on the Provincial Election.” Three of our province’s leading political reporters: Keith Baldrey of Global News, Mike Smyth of The Provinceand CKNW and Vancouver Sun columnist Vaughn Palmer took to the stage in front of hundreds of members of the real estate and development industry to share their insights on the upcoming provincial election and in particular how they see the issue of housing being tackled by the two key parties.

Now, we all know that Christy Clark’s incumbent government has already made two (and a half) significant moves to influence the housing market in recent months, despite previously declining to intervene. To recap, those moves were the August introduction of the 15 per cent foreign buyer tax and the December launch of a five-year interest-free down payment loan program for first time buyers. I say two “and a half,” because I consider the half to be the recent amendment to the foreign buyer tax to exempt foreign BC residents with work visas. In addition, the province has injected a record $500 million in affordable rental and low-income housing units, announced last fall.

With these recent policy changes in mind, and housing affordability being regularly touted as a key concern of British Columbians, many of us at the UDI event expected our political panellists to predict one or two more vote-grabbing moves under the housing file, ahead of May’s polls.

However, two of the panellists, Vaughn Palmer and Keith Baldrey, seasoned and insightful journalists, both asserted their belief that the BC Liberals will “gamble” that their housing market interventions to date have been enough to cool the issue. And all three speakers expected the focus of the incumbent party’s campaigning to be more on the economy and taxation, predicting either sales or income tax cuts in next week’s provincial Budget announcement.

Vaughn Palmer told the UDI audience, “Read the throne speech. [Housing] is a non-issue – well, according to the government. After all their nasty talk about making local government increase density around transit lines, what did they say in the throne speech this week? ‘We’re going to work with municipalities to encourage them to increase housing density.’”

Keith Baldrey added, “I think the issue of housing is partially diffused. Certainly it’s not the red-hot issue that it was a few months ago. I think the Liberals have made all the changes they are going to, pre-election… I think they’re gambling that it has been diffused to the point where they don’t think the voters are going to say ‘well the NDP has much better policies [on housing].’ Basically the Liberals stole some NDP policies on housing anyways.”

Baldrey added, “[The Liberals] don’t care about people in Vancouver, in Mount Pleasant. They relentlessly pursue the ridings in which they know they can win.”

An interesting point – and perhaps the commentators are right about the Liberals basking in some complacency over the housing file, following their recent big moves. But the NDP certainly does care about keeping its seats in Vancouver and Burnaby’s urban ridings – so even if the Liberals rest on their housing laurels, that doesn’t mean that the NDP will allow the issue to be sidelined in its upcoming campaign. Leader John Horgan has already highlighted cost of living as one of his key platforms, and NDP MLS for West Point Grey, David Eby – arguably more prominent and certainly more media-savvy than Horgan – seems to be all housing, all the time.

The BC Budget next week will be telling – and then we’ll soon be full swing into the election campaign. Whatever happens, it’s going to be a fascinating spring.

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